Retiring to Canada may not be as glamorous an idea as retiring to Spain or enjoying your retirement in France. Canada is no Mediterranean and is a bit of a journey from Europe. However, certain advantages of Canada can make it a perfect retirement destination.
- Can retiring to Canada be the right option for you?
- The pros and cons of retiring to Canada
- Visa and residency for retiring to Canada
- The easiest way to retire to Canada – go part-time
- Your pension options when you retire to Canada
- Pension income and taxes in Canada
- Retiring to Canada – summary
If you are a nature lover, if standards of living are really important to you, and you want to make sure that your pension income in retirement works as best as it can for you, then Canada is a strong competitor.
Whilst Canada has certainly not been immune to the global financial crisis, it has weathered the storms on the real estate, economic and jobs front far better than either the UK or America. This naturally has a knock-on effect in terms of public feeling in the country.
Proof of this has been delivered in the form of a survey conducted by the 6th largest bank in North America, which found that on the whole over 70% of those who have chosen to retire in Canada find that life is exactly how they planned it to be.
Monetary concerns are not uppermost in a retired Canadian’s mind it seems – and naturally enough, lack of such a significant worry can go a very long way towards happiness.
Can retiring to Canada be the right option for you?
If you’re looking for a decent standard of living for a fair price, a laid back yet sophisticated country, a place where you can grow old gracefully and with dignity, a nation with lively towns and cities and plenty of stunning natural attractions – then yes, Canada could be the right choice for you.
In this report, we explore all the things Canada has in its favour as a retirement destination.
The aforementioned survey into the wellbeing of Canada’s retirees and their attitude towards life in retirement revealed that the majority of retirees were able to afford their life in retirement.
They were not forced to live beyond their means because the cost of living was within reach.
What’s more, the fact that there is a government-funded social health care scheme took away another potential stressor as Canadians realised that as a bottom line, they would always be looked after.
The social system in Canada almost mirrors that in the UK – in times of trouble, there is a system available that will step in and step up and help you.
So, with all of these things in mind, a would-be retiree thinking about settling down in Canada needs to ensure they will qualify for social assistance when they relocate so that they too have this bottom line covered.
The pros and cons of retiring to Canada
The cost of living in Canada from the taxes to utilities, from every day groceries to eating out is slightly cheaper than in the UK on the whole.
Property prices are also more favourable as long as you don’t decide to buy prime property in a major city!
You can make your money go far further in Canada if you step off the beaten track and out of ‘commuterville.’
Canada is a popular choice with British expats of all ages. This means you’ll have instant access to potential friends and likeminded people who can help you settle in and make the most of your new life.
Explore expat forums to find friends ahead of a move, and consider joining in with pre-planned social activities in your new community to enable you to build social contact and develop the friendship links which are so critical to us at every stage of life.
Canadian climate can be a tough challenge for those unaccustomed to hush winters with snowstorms and lush summers with an abundance of mosquitoes.
Remember that whilst the dream of living in a log cabin in the wilds of Canada may always have been your ideal, such a home may be inaccessible for large parts of the year – and certainly not ideal for a retiree who may find they need increased access to services and facilities in the towns and cities as they age!
Perhaps such a dream can be lived out every year on holiday instead?
In terms of accessibility – although Canada is regularly serviced with direct flights from the major airports in Europe, it’s still quite a long flight away. Think carefully, if you need to see your friends and family often can you afford to do so?
Although flight prices are slashed outside of school and public holidays, it’s still pretty expensive. If you want to keep in close touch, become a frequent flyer with your favoured airline and collect bonuses and air-miles that should reduce the overall cost burden of your travel.
Visa and residency for retiring to Canada
Visa and residency is a big question for those willing to retire to Canada. Simply speaking, there is no retirement programme or retirement visa in Canada for foreigners, which makes the whole thing complicated and outright expensive.
The best way to retire to Canada is to be sponsored by your children who are resident in Canada.
How your children can sponsor you to retire to Canada
Your children or grandchildren can be your sponsors if you want to retire to Canada. They must:
- Be at least 18 years old
- Live in Canada
- Be Canadian citizens or permanent residents of Canada
- Have enough money to support you (for this they need to provide proof of income). In 2018minimum income required for the 3 taxation years right before the date of the application was $40,379 for two sponsored people.
When your children sponsor you to come to live in Canada, they must promise to support you financially for a period of time no matter what your financial position is.
Even if you are really well-off and able to fully support yourself, it’s your children who in the eyes of the Canadian government must be responsible for all your basic needs. It is called an undertaking.
The undertaking commits your children to do the following:
- provide financial support for their sponsored family members for 20 years, starting when they become permanent residents;
- repay any provincial social assistance (money from the government) that their sponsored family members get during that time.
Also, you and your children sign the sponsorship agreement in which children agree to provide for your basic needs while you agree to make every effort to support yourself.
When you apply, you’ll have to complete and sign a form that includes the undertaking and the sponsorship agreement.
Other ways to obtain Canadian residence
If you don’t have children living in Canada, your option is either to plan your retirement well ahead and immigrate to Canada well before retirement age as a skilled person or choose one of the numerous business immigration routes.
Business immigration offers permanent residence in Canada.
You can choose which route suits you best: the Quebec Immigrant Investor Programme (QIIP), Quebec Entrepreneur programme, Quebec Self-Employed persons, Provincial Nominee Entrepreneur programme, or the Federal Immigrant Investor Venture Capital (IIVC) Pilot Programme.
Most entrepreneur and self-employed programmes are aimed at individuals who can establish and operate a business in Canada and have enough money to do so.
The investor programme is designed for super-wealthy. They are required to make a passive investment with no obligation to establish a business.
You can read about all these programmes in detail in our Canada Visa Guide.
There is another way to immigrate to Canada and it’s becoming more popular despite the complexities and the paperwork required.
Wealthy business immigrants can buy or establish a new business in Canada and apply for a temporary work visa as a management employee, under federal ‘owner-operator’ policies.
After a period of time, applicants may qualify for permanent residence under a provincial programme or as a federal skilled worker under Express Entry.
The easiest way to retire to Canada – go part-time
As you can see, if you don’t have children or grandchildren who are Canadian residents, or a couple of million stashed in a bank account to buy a business there, retiring to Canada and obtaining a permanent residence might prove really tricky.
However, there is a way to skip all this annoying paperwork and still enjoy living in Canada, but only if your attitude to retirement is flexible and you are prepared to go part-time.
You can enter and stay in Canada for up to six months without a visa or any additional paperwork if you are a citizen of certain countries including the EEA countries, the UK, the United States.
You will, however, need an ETA (Electronic Travel Authorisation) if you are arriving in Canada by plane.
Six months is enough to travel and get to know Canada well enough, try out different locations and see the best places to live in Canada with your own eyes. You will be in a better position then to judge whether you want to retire to Canada permanently.
You can also skip the winters and spend them somewhere really warm or back in your own country enjoying time with your family and friends.
Choosing a part-time retirement will still let you buy your own home in Canada that you can rent out when you’re not in the country. It’s even possible to get a mortgage.
Your pension options when you retire to Canada
If you want to retire to Canada permanently and manage to find a way to do so, you will actually be able to qualify for Canada’s Old Age Security (OAS) pension.
You are entitled to it even if you have never worked in Canada if:
- You are 65 or older;
- You have lived in Canada for at least 10 years since the age of 18;
- You are a Canadian citizen or legal resident at the time your application is approved.
Your state pension
If you have a state pension from your home country, you need to research the options for how you can draw it in Canada.
As an example, if you are a UK citizen, your UK state pension can be claimed by contacting the International Pension Centre.
You need to decide whether you want your state pension to be paid in your Canadian bank or in your home country.
If you choose your Canadian bank account, you’ll be paid in Canadian dollars and the amount you get will vary from month to month due to the fluctuation of exchange rates.
It makes total sense to opt for your state pension to be paid to your Canadian bank account if you retire there permanently. While if you do a part-time retirement in Canada, then your state pension can be paid into the bank account of the country where you reside the longest during the year.
Living in-between two countries requires careful management of your money transfers otherwise it can become very costly. Read how an international bank account can help you manage your money.
Your private pension and retirement in Canada
If you are planning to retire to Canada and you’re a UK citizen, unfortunately, there is no longer an option for you to move your pension to a Canadian scheme.
Canada has been removed from QROPs list in February 2017.
What you can do instead is to transfer your pension to a UK international self-invested personal pension (International SIPP). You can also move it to a third country, however, you can end up paying a 25% exit tax.
It’s probably best to seek qualified advice to decide the best way of dealing with your private pension. You can also read more about your possible pension options abroad.
Pension income and taxes in Canada
If you reside in Canada permanently and your country of domicile has a Double Taxation Treaty with Canada, then your pension income will be taxed according to the treaty.
In most cases, it means you will be subject to Canadian taxation rules and won’t be taxed by your country of domicile.
If you do a part-time retirement in Canada, you will most likely be a tax-resident in the country where you spend the most time in the year. Be careful to make sure you know where you qualify as a tax resident not to avoid getting in trouble with the tax authorities.
Retiring to Canada – summary
As you can see, retiring to Canada can be a pretty difficult process, however, many people think it’s worth it.
Whether you could be happier retiring in Canada is a very personal choice – the fact of the matter is, however, it’s a country with a lot stacked in its favour if you can get through the immigration requirements.
You might find useful:
- The Expat Guide to UK Pensions Abroad – detailed information about your state, workplace and private pensions when you retire abroad; your options, tax implications and opportunities if you transfer your pension pot abroad or leave it in the UK;
- 10 Top Reasons That Make Living in Victoria BC Amazing – a detailed overview of British Columbia’s stunning capital Victoria, and why it might be the right place for you to retire to;
- Visit our Canada Country Guides page for more information on living in Canada.